In the Market for Good X, Demand Is Q^D =

question 105

Essay

In the market for good X, demand is Q^D = 6,000 - 0.8P and supply is Q^S = 0.4P - 300.
a. What are the equilibrium price and quantity?
b. Solve for the inverse demand and inverse supply equations.
c. Suppose that an increase in consumer income makes consumers willing to pay $500 more per unit of good X. Also, a technological breakthrough in production makes firms willing to sell good X for $500 less per unit. What are the new equilibrium price and quantity?

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Definitions:

Credit Terms

Conditions under which credit is extended by a seller to a buyer, including the repayment period, discount for early payment, and the amount of late fees.

Invoice Date

The date indicated on an invoice, representing when it was issued, which marks the start of the period in which payment is expected to be made.

Sales Returns

Merchandise returned by customers for a refund or credit, reducing total sales revenue.

Cost of Goods Available for Sale

The total cost of merchandise that a company can sell during a certain period, including both its beginning inventory and the cost of any goods purchased during the period.